[ad_1]
A 2.5% surcharge on the state’s most profitable businesses will expire at the start of the new year, reducing New Jersey’s revenue by about $1 billion each year as tax revenues continue to decline.
With the expiration of a levy on companies with annual profits of $1 million or more, New Jersey no longer boasts the highest corporate tax rate of any state in the nation, but its top tax rate of 9% remains at the top. It will remain at the same level. Best in Japan.
Business groups have long called for an end to the levy, saying the state has become known for high taxes that make it less desirable for large companies.
“As I’ve said before, honoring this commitment means that New Jersey’s leaders understand the importance of economic growth,” said New Jersey President and CEO Tom Bracken. “It sends a strong message to existing businesses and businesses looking to relocate to New Jersey that we are doing the right thing.” The Chamber of Commerce and Industry made the announcement after MPs went on leave instead of having their surcharges extended.
The levy was first enacted in 2018 as a temporary measure after Gov. Phil Murphy reached an impasse with lawmakers over taxes on billionaires. The surtax was scheduled to expire at the end of 2021, but lawmakers extended it until the end of 2023 to fill an expected pandemic-related hole in the budget that never fully materialized.
Progressive groups and some local leaders are outraged by the end of the surtax, and at a time when state revenues have begun to decline, guilty lawmakers have effectively cut benefits to the state’s most profitable businesses. Acknowledged.
They say the elimination of the levy, which accounts for about a fifth of annual corporate business tax collections, will force the state to reverse course on some of the policies enacted during Mr. Murphy’s tenure. He expressed concern that this may be the case.
“Unless you can generate the revenue to support these large investments, the math doesn’t add up,” said Peter Chen, senior policy analyst at New Jersey Policy Perspectives. I think it’s a good thing.” “Fully funding pensions is a good thing. It’s good to get the school funding formula closer to being fully funded. Adding kindergartens is good. We support all of this, but we don’t know the cost. must be paid.”
The levy could be reinstated during future budget cycles, and that reinstatement could include provisions to make the tax retroactive. A 2020 law that extended the surcharge through 2023 and increased the surcharge rate from 1.5% to 2.5% included such language.
Funding for the New Jersey Department of Transportation
By eliminating the surcharge, lawmakers have left the New Jersey Transit Authority without a clear source of funding to bridge the fiscal cliff it faces in the upcoming budget year.
The federal funding that has kept the New Jersey Transit Authority financially operational in recent years is scheduled to run out midway through fiscal year 2025, as the agency struggles to replace ridership lost during the pandemic.
During the year, the New Jersey Department of Transportation faced a $119.4 million deficit. Next year, the shortfall increases to $917 million.
Senate President Nicholas Scutari (D-Union) has said repeatedly that states could use corporate business tax levies to fund transportation, but this proposal met with resistance Even from the governor and powerful members of his own chamber.
A Scutari spokesperson did not respond to a request for comment.
Lawmakers are exploring other options for funding the New Jersey Department of Transportation during the next fiscal year. While these discussions are still in the early stages, some have suggested repealing the 0.375% sales tax cut enacted under Gov. Chris Christie to meet the transit system’s revenue needs.
Reversing the cuts would cost the state about $750 million a year in revenue, but that seems an unlikely path for legislative Democrats who have made affordability a centerpiece of their policies for the past two years. .
Sales taxes are regressive because low-income residents spend a higher percentage of their income on taxable goods, and the tax is broad-based, meaning most residents will feel the effects of a sales tax increase. .
But it’s not even clear whether lawmakers will try to put money into the New Jersey Transit Authority next fiscal year. The agency faces a $917 million fiscal cliff and the shortfall is expected to get even deeper in fiscal year 2026, but the $119.4 million needed to cover next fiscal year’s expenses will never be met. It’s not an insurmountable amount.
“We won’t need it in 2025. We won’t need it until next year. It will take two years to find a dedicated funding source,” Sen. Paul Sarlo (D-Bergain) said in late November about the fiscal year. he told the New Jersey Monitor.
New Jersey is expected to end the July-June 2024 fiscal year with a surplus of about $8.3 billion.
At the time, Sarlo declined to say whether lawmakers would pass next year’s budget without funding the New Jersey Transit Authority.
“It’s hard to say. Let’s get over the lame duck first,” he said.
[ad_2]
Source link
